Solana (SOL), one of the leading altcoins in the cryptocurrency market, is under increasing selling pressure after losing a key technical support level. With the asset now hovering near $135.5, market analysts warn that a 20% dip could be on the horizon if current sentiment does not improve.

The latest drop comes as geopolitical tensions continue to unsettle global markets. The escalating conflict involving Israel, Iran, and the United States has turned investor sentiment risk-averse across speculative assets, including cryptocurrencies. Solana, known for its sharp rallies and equally fast pullbacks, is once again caught in the storm.

Over the last 24 hours, Solana has declined more than 4.1%, slipping below the crucial $141 support. The breakdown not only reflects broader market weakness but also coincides with a notable 10% decline in trading volume, indicating reduced participation from both retail and institutional players.

From a technical perspective, the signs are not encouraging. Solana has confirmed a breakdown from a bearish head-and-shoulders pattern on the daily chart. The price has also failed to hold above both the 50-day and 200-day exponential moving averages (EMAs), signaling an entrenched downtrend. If current sentiment persists, analysts believe SOL could fall to around $114—a drop of over 20% from recent levels.

However, there is a clear line in the sand for bulls. If Solana can reclaim the $145 mark with strong volume, the structure could flip bullish again. A successful break above that level may open the door for a potential 15% rally, targeting resistance near $166.

The Relative Strength Index (RSI) for Solana currently reads 33.50, suggesting that the asset is in oversold territory. While this does not guarantee an immediate reversal, it does imply the possibility of a short-term relief bounce—particularly if buyers begin stepping in around current levels.

Interestingly, despite the negative technical outlook, sentiment metrics remain surprisingly optimistic. Data from on-chain analytics firm Santiment shows that 71.03% of current sentiment toward Solana is positive, while only 20.63% is negative, and 8.33% is neutral. This suggests that a large portion of the market is still betting on a rebound.

Supporting this optimism, on-chain data also shows a significant shift in token movement. Over the past 48 hours, exchanges have recorded a combined outflow of $73 million worth of SOL. Typically, when assets are moved off exchanges, it is interpreted as a sign of accumulation and long-term holding rather than preparation for sale. If this trend continues, it could reduce near-term selling pressure and serve as a bullish signal for the broader Solana ecosystem.

Traders on Binance are also aligning with this outlook. The Long/Short Ratio for the SOL/USDT pair on the exchange currently stands at 2.97. This means that nearly 75% of traders are holding long positions on Solana, while only 25% are betting on further declines. Such a strong skew toward bullish positions reflects growing confidence that the current dip may be temporary.

Despite the encouraging sentiment and exchange outflows, traders should remain cautious. The current market setup presents a classic conundrum—while fundamentals and sentiment data suggest accumulation, the price structure remains weak. Unless Solana reclaims key levels, the danger of another leg down remains real.

Ultimately, Solana is at a pivotal point. A continuation of outflows, improving sentiment, and a potential RSI bounce could act as a springboard for a recovery. However, if price continues to trend lower without regaining $141 or $145, it may signal that bullish sentiment is failing to translate into actual buying power.

In the coming days, all eyes will be on whether this pullback turns into a deeper correction—or if it sets the stage for Solana’s next breakout move.